Definition
1. Payback period is the time in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investment appraisal techniques.
2. Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even pointPayback period is usually expressed in years. The time value of money is not taken into account. PaybackAll else being equal, shorter payback periods are preferable to longer payback periods.The term is also widely used in other types of investment areas, often with respect to energy efficiency technologies, maintenance, upgrades, or other changes.
Abbreviation
PB, PP
Synonyms
Payback Time, Payback Ratio
Superterms
Subterms
Sources
http://accountingexplained.com/managerial/capital-budgeting/payback-period (1.); https://en.wikipedia.org/wiki/Payback_period (2.)
Author: Svenja Gutt
